Reduced e-toll rates 'financially irrational'

Government will face an uphill battle in the collecting of e-tolls, says Alex Eliott, director at law firm Eversheds SA.

The reduced e-toll tariffs gazetted last month - reduced from the original rates put forward in 2011 - will ironically render e-tolling even less cost-effective, according to a legal expert.

Alex Eliott, director at law firm Eversheds SA, adds that the reduced fees will ultimately see government’s push to implement the system becoming “financially irrational”.

He explains that the proposed amendment to the SA National Roads Agency (Sanral) and National Roads Act will see the cost of collecting the proposed e-tolls outweigh the value of the e-tolls itself.

“The proposed amendment by government could easily see Sanral paying R20 in collection costs for every unregistered vehicle. This could ultimately cost Sanral substantially more than what it collects in e-tolls over a year.”

“Although government recently tried to soften the blow to motorists by announcing e-tolls will be far lower than previously announced, this makes the collection of e-tolls from those unwilling or too lazy to register with Sanral, even less cost-effective."

Eliott explains that the administrative costs involved in billing unregistered users will outweigh the value of the e-toll process.

This is in addition to the amendment that includes a legal presumption that the driver/user of the vehicle is the owner of the vehicle. "Legally, this presumption cannot be imposed on Gauteng’s vehicle owners, without providing them with an opportunity to refute the claim that they were not driving the vehicle when the e-toll was imposed.

“Interestingly, the presumption itself goes against the ‘user pays’ principle, which was, according to National Treasury, a cornerstone of the e-tolling system.

“Here again, issuing the written e-toll claim and ensuring it is imposed on the correct person involves administrative costs that, practically speaking, will undoubtedly outweigh he value of the e-toll process.”

Eliott says, unless government institutes a law that all Gauteng residents with vehicles are duty-bound to register with Sanral, the reduced tariffs do not make financial sense for the government.

Finance minister Pravin Gordhan announced reduced tariffs in February, and Government Gazette number 35756 (of 25 October) publicly gives tariffs for standard, e-tag, alternative users, discounted rates and exemptions from payment of tolls. According to proposed tariffs, motorists with e-tags will pay 30c per km – down from the original 49.5c proposed in 2011. Motorcyclists will pay 20c, down from 24c; non-articulated trucks will pay 75c, down from 100c; and articulated trucks R1.51, from R2.

At the time, Gordhan also announced that National Treasury would make a contribution of R5.8 billion to the Gauteng Freeway Improvement Project (GFIP), for which e-tolling was created.

The public proposal of tariffs marked a 30-day period for public comment, after which government will take 14 days to consider input and publish its final position. Government will then take a further 14 days to re-gazette the tariffs and implementation is in this case set to begin before Christmas.

On the flipside, a study by the Gordon Institute of Business Science (University of Pretoria) earlier this year suggested the e-toll system is, in fact, progressive.

Roelof Botha, adjunct faculty at the university, says the e-tolling system is a flagship project, especially in terms of raising SA’s international competitiveness.

He says that, on average, if road users were to take the time savings per year because of congestion relief and translate 15% of that time saving into productive work, net benefit for every R1 of toll fees paid would be R8.84.

“Assuming that 15% of the commuting time saved as a result of the GFIP will be translated into productive earnings, an annual net benefit of more than R2.1 billon accrues to the South African economy.”

Eliott says he would argue the opposite, suggesting government will face an uphill battle in collecting e-tolls. “I would dare say the system itself will become the province’s white elephant – costing it more than it brings in tax collections.”

The only real way for government to get around this risk, he says, is to force all Gauteng residents with vehicles to register with Sanral for e-tolling. “Although this could cause another upsurge from Gauteng residents similar to that which we saw prior to the amendment being drafted.”